It’s easier said than done.
Who doesn’t want to be rich? At the end of the day we’re living under capitalism, it’s kind of the point.
But still somehow it never seems to happen. I speak from personal experience here, and unless you’re a budding Zuckerberg or Bill Gates, I’m guessing you’ll probably relate too.
Fear not though, there could be a solution to your continued problem with capital accumulation.
Grant Sabatier, a 30-something self-made millionaire recently pointed out that most Americans (and around the same applies to Brits too) spend 70% of their money on housing, transportation, and food. If they cut down on this then they could be quids in.
If you can spend less on those expenses, “then you can bank the difference,” Sabatier wrote on his website Millennial Money.
He continued: “If you move to a smaller apartment, walk to work, and cook at home, you could realistically increase your savings rate to 25%+ or even higher.”
The tips are simple, but they’re effective.
If you overpay for housing for example, you should look to move somewhere that costs 30% or less of pretax income. If you really want to save, find a place that allows you to spend 25% or less of your after-tax income. Even if it means living in a dive for time being, the endgame will be a flourishing savings account.
As for transport, ask yourself do you really need that expensive car? Obviously make sure it’s reliable, but you should also pay cash up front, or pay off the auto loan in three to four years at most. Otherwise the interest will really come back to bite you.
Finally, for food, avoid eating out and instead cook your own chow. Cut out those pricey ready meals and snacks – not only will that save you money, it should help you lose a few pounds too.
And if you’re wondering what Sabatier has to say for himself. He adds: “At the end of the day it comes down to a personal choice, but I was happy moving to a smaller apartment, moving closer to my office, and eating out less, to bank the difference.
“And I definitely was able to bank the difference — saving at least an additional $13,000 per year by cutting back.”
So what are you waiting for? Get saving.
